REUTERS | Navesh Chitrakar
November 20, 2020

When is an offer to settle a Part 36 offer?

A Part 36 offer is an important tactical weapon that can be used by either party to encourage the other side to settle a dispute. That is because a Part 36 offeror may be entitled to substantial costs benefits if successful at trial. However, in order to benefit an offeror must comply with the rules set out in CPR Part 36.

This post looks at Pepperall J’s judgment in Essex County Council v UBB Waste (Essex) Ltd, where he held that if a Part 36 offer could be construed in one of two ways (one giving it effect and the other not), the construction giving it effect should prevail. Obiter, he also commented that minor defects in a purported Part 36 offer cannot be overlooked, and that principles of estoppel do not apply to the Part 36 regime. Continue reading →

REUTERS | Yuri Maltsev
November 17, 2020

Payment down the chain

Cash-flow management remains one of the main problem areas in construction and engineering projects. Issues in getting paid, serious enough on their own, are often an early warning sign for a project heading into wider difficulties.

There can of course be a number of culprits for cash-flow difficulties. A few weeks’ ago, my colleague, Yousef Shakah, took a closer look at one routine offender: mishandled retentions. Today, I’m going to take a look at conditional payment clauses and consider the guises they can take, how different jurisdictions have chosen to deal with them, what problems they can cause and finally, in jurisdictions where they are permitted, approaches which have evolved to mitigate their misuse. Continue reading →

REUTERS | Regis Duvignau
November 10, 2020

Coulson LJ’s seven golden rules for adjudicators revisited

The past couple of months have been somewhat lean for TCC judgments on adjudication and arbitration matters, so when our (brilliant!) editor at Thomson Reuters asked me what I wanted to write about this week the answer was not immediately obvious to me. There’s certainly been a lot on the news over the past week and, for once in 2020, there has been some good news. However, you’ve all got plenty of apps and networks giving you your news fix, so I won’t dwell on that. I had pondered discussing my top five movies of the 1980’s, but suspect I won’t get asked to write another construction blog if I do that.

I therefore glanced through the last 12 years of blogs that Matt and I have written, and noticed one of Matt’s from May 2010 when he covered what Coulson J (as he was then) had said at a Society of Construction Law meeting earlier that month about the seven golden rules for adjudicators. The question struck me as to whether those rules have stood the test of time (they have), and they seem particularly relevant at the moment as a number of nominating bodies have been recruiting new adjudicators to their panels over the past couple of years, including RICS. Continue reading →

REUTERS | Darrin Zammit Lupi
November 3, 2020

Novation, step-in and a potential problem with CIGA 2020

Where the contractor has become insolvent, what obligations can an employer enforce when stepping-in to a previously novated professional consultant’s appointment in a design and build scenario?

A question that routinely arises in practice, this scenario is perhaps more relevant now than ever, not only because of COVID-19 but also because of the Corporate Insolvency and Governance Act 2020 (CIGA) that our colleague, Primrose Tay, blogged about.

This blog will take a closer look at this question. First, novation – what it is, what it does and what the novating party (here, the employer) needs to do when novating a contract to protect its position. Then step-in – how it works, what rights and obligations does the stepping-in party (here again, the employer) have and is it even possible now in the event of contractor insolvency? Continue reading →

REUTERS | Thomas Peter
October 21, 2020

Assignment of sub-contracts – benefit and burden, risk and reward in the TCC

When a project goes so poorly that an employer feels obliged to terminate its main contractor, the employer will often take an assignment of various sub-contracts. But what exactly does it mean to “assign a sub-contract”?

Of course, the employer may also claim against the main contractor for delay damages, additional costs to complete and so on, and the main contractor may wish to pass down its liability to the sub-contractor(s) whom it blames for the problem. But can it do so?

These questions, and more, were addressed by O’Farrell J in the recent TCC case of Energy Works (Hull) Ltd v MW High Tech Projects UK Ltd.  Continue reading →

REUTERS | Tom Brenner
October 19, 2020

TCC throws a lifeline to paying parties: “manifest injustice” trumps the statutory payment machinery

In 2015, one of the hot topics of the day (at least in construction circles) was the case of Galliford Try Building Ltd v Estura Ltd, where the TCC unusually ordered a partial stay of an adjudicator’s decision on the basis that to enforce the decision in full would result in “manifest injustice” to the paying party. There was a concern that the case would encourage a flurry of cases seeking to test the boundaries of that principle.

Indeed, since Estura, various attempts have been made to seek a stay on grounds of manifest injustice, but rarely have these cases been successful. This was not to be unexpected; the failure to secure a stay on the basis of “manifest injustice” simply emphasised the exceptional nature of the decision in Estura.

However, the recent case of JRT Developments Ltd v TW Dixon (Developments) Ltd is an example of where the TCC decided to buck the trend and follow Estura. In that case, the court ordered a stay of enforcement of a £1.15 million smash and grab adjudication decision obtained by JRT Developments Ltd (JRT) on the basis that in the “exceptional circumstances” of the case, there would be manifest injustice to TW Dixon (Developments) Ltd (TWD) if the judgment was not stayed.

In reaching that conclusion, the court considered “all of the circumstances of the case” and therefore took into account factors beyond those that had been identified in Estura as relevant. These factors included, significantly, the factual context in which JRT had submitted its payment application, which resulted in an adjudicator’s decision in its favour, and the nature of the sums claimed in that application. Continue reading →

REUTERS | REUTERS/Goran Tomasevic
October 16, 2020

A few lessons I have learned from resolving disputes during the pandemic

I appreciate that the title of this blog may have put some people off, partly because they’ve had enough of reading about this frankly horrible pandemic, and partly because much ink has already been spilled on the issues arising from the resolution of disputes during it (including by Matt in earlier blogs). However, for those of you still reading, I want to assure you that this is not intended to be a detailed guide, but rather a summary of a few lessons I have learned, in some cases the hard way.

I’ve intentionally referred to “resolving disputes” as many of these lessons have been learned conducting arbitrations during the pandemic, as well as adjudications. I’ve not yet conducted a mediation during the pandemic, so that will have to wait for another day.  Continue reading →

REUTERS | Jacky Naegelen
October 7, 2020

Retentions under scrutiny and the transferred loss principle

In this challenging economic climate, contractors are striving to keep their businesses afloat. Healthy cash flow is key and a major barrier to achieving this can be the slow release of (or indeed the failure to release) retention.

The idea of a retention in theory is simple: a way of incentivising the contractor to return to site to remedy outstanding defects and/or complete the project. If it fails to do so, the employer is not left high and dry. Provision for retention is routine in a number of standard forms including many in the JCT family and in NEC4 Option X16.

But, as with many good ideas, the problem comes with their operation in practice. The February 2020 summary of responses to the BEIS 2017 consultation on the practice of cash retention under construction contracts makes a sobering read. It highlights unfair practices surrounding retentions in certain corners of the industry. Continue reading →